Tuesday, November 14, 2017

The Rise of the Creative Class, the New Urban Crisis, and the Promise of Inclusive Growth (part one)

By Stephanie Allen, Project Assistant

You’d be hard pressed to find an urban planner or economic
developer in the western world who hasn’t heard of Richard Florida and his 2002
book The Rise of The Creative Class.
The book was wildly popular. And, depending on who you ask, it either predicted
or drove the revival of postindustrial cities. Cities and towns across the
United States developed strategies to help them attract the creative class.
And, for the most part, the cities and towns (big and small) that were
successful in attracting these sought after knowledge workers have prospered.

However, as Florida’s new book points out, that prosperity has
come at a cost. The rise of the creative class and the increasing economic
inequality and segregation that has seen the downfall of the middle class and
the suburbanization of poverty seem to go hand in hand. According to Florida,
the rise of the creative class caused what he’s calling “the new urban crisis”
in his book of the same name, The New
Urban Crisis: How Our Cities Are Increasing Inequality, Deepening Segregation,
and Failing the Middle Class – and What We Can Do About It.

For years economic developers have created strategies to attract
these young, mobile knowledge workers to their cities, towns, and regions based
on Florida’s theory that attracting the creative class would grow their
economies. And, the places that were successful in attracting a large creative
class, like San Francisco, San Jose, Austin, Los Angeles, Denver, and Portland,
have seen a great deal of economic prosperity. Along with this prosperity,
though, have come soaring rates of economic inequality and segregation.

As the knowledge workers of the creative class (aka, the upper
middle class or, more precisely, the college educated, mostly white children of
the upper middle class*) rediscovered the city, they spurred gentrification,
displacement, and skyrocketing home prices and rents. The less affluent and
less advantaged have been increasingly priced out of such cities, making the
landscape of the United States more and more economically segregated, and, in
turn, making it harder and harder for the less affluent and the less advantaged
to gain access to the kinds of opportunity required to live the American Dream
of upward social mobility.

This kind of economic inequality is problematic. It isn’t
just bad for the wallets of those attempting to climb up the ladder of the
American Dream. Research suggests that this kind of inequality makes us all
(upper, middle, and lower classes) less happy and less healthy. Research
also suggests that as inequality rises so do rates of violent crime. And, if
that’s not enough, while specific cities may prosper as their economic inequality
increases, the data suggests that when we zoom out to the state level we
become, on average, less wealthy—income per capita decreases as economic inequality increases. So,
even as cities prosper based on the clustering of the knowledge workers of the
creative class, we’re actually all getting a bit poorer, on average.

The new urban crisis impacts all of us. And, it seems as if
it is the inevitable product of the kind of knowledge clustering that spurs
innovation and drives the economy. In a recent piece in The Atlantic, Florida
calls this “the fundamental contradiction that stands at the heart of today’s
urban knowledge capitalism.”

So, after years of hard work attracting the creative class, are
we simply doomed to increasing inequality; decreasing health, wealth, and
happiness; and increasing rates of violent crime?

Perhaps. In his book Florida suggests that the problems that
have created this crisis are systemic and deeply rooted in the American
economy. If that’s so, they might be best addressed at the national level. But,
that’s not likely. And, reviewers like this one think Florida knows it.

So, what can we do? Focus
on inclusive growth. In recent articles on his City Lab website (like this one and this one), he calls on local governments, economic development organizations, non-profits,
philanthropic organizations, and urban anchors (like high-tech companies and
real estate developers) to foster the creation of inclusive growth and reduce
barriers to economic opportunity.

I’ll talk about what inclusive growth is and how we, as
economic developers, can promote it in next week’s post.